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Tech Firms Keep Piles of 'Foreign Cash' In US
theodp writes "There's a funny thing about the estimated $1.7 trillion that American companies say they have indefinitely invested overseas,' reports the WSJ's Kate Linebaugh (reg. or the old Google trick). 'A lot of it is actually sitting right here at home.' And if tech companies like Google and Microsoft want to keep more than three-quarters of the cash owned by their foreign subsidiaries at U.S. banks, held in U.S. dollars or parked in U.S. government and corporate securities, Linebaugh explains, this money is still overseas in the eyes of the IRS and isn't taxed as long as it doesn't flow back to the U.S. parent company. Helping corporations avoid the need to tap their foreign-held cash are low interest rates at home, which have allowed U.S. companies to borrow cheaply. Oracle, for instance, raised $5 billion last year, paying an interest rate roughly two-thirds of a percentage point above the low post-crash Treasury yield, about 2.5% at the time (by contrast, grad students and parents pay 6.8%-7.9% for Federal student loans). Were the funds it manages to keep in the hands of its foreign subsidiaries brought home and subjected to U.S. income tax, Oracle estimated it could owe Uncle Sam about $6.3 billion."
time for a outsouring tax?
Be for long we will need a way to pay for all people in the USA not working.
It sounds to me like they are using their foreign profits like a 401k, keeping them in accessible until they need them, and then paying tax on them when they do.
I don't have a problem with Oracle paying more taxes. The "fix" though seems to be that in charging them for any foreign assets on shore that we simply create the pressure that causes them to leave their foreign profits overseas. By letting them use these profits as collateral for loans, we get billions of extra dollars sitting on our banks allowing those banks to give out cheaper loans to the rest of us.
Whether or not Oracle deserves a tax-deferred-savings account like mine, the fix of pushing the money back overseas, seems worse than the illness.
So then we should have no taxes at all?
If you want to benefit from our civilization you should expect to have to pay for it as well.
Why would you compare the interest rate that Oracle can borrow money at with an average college student whose family does not have enough funds to pay for college themselves? Oracle has over $30 billion in cash reserves, so they are a much safer bet to lend $5 billion than a college student who can't scrape together $100k.
Do people honestly think banks should lend money with rates based on how sympathetic the borrower is?
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
You are still paying for and participating in the civilization of the major urban centers.
I have no desire to move to New York city, I do like visiting it though. I have no problem with some of my tax dollars ending up there. As it turns out New York city and the entire state actually lose money on federal taxes in that they pay more than are returned to them. This is very common of the blue states being the providers and the red states being welfare queens.
where are they when people point these massive corporate welfare entitlements?
Not really. We have a dog's breakfast of programs that provide food subsidies, housing subsidies, subsidies for mothers with children they can't support, free cell phones, unemployment benefits, medical subsides, and disability subsidies.
The system is so crazy that we have parents actually encouraging their kids to BE crazy so they can receive more money.
But by gaming the system a person can do pretty well. A single mother with two kids making $29,000/year receives net income and benefits of over $57,000. Earning more income actually results in a net decrease in total income+benefits -- this is the "welfare cliff".
Whether or not Oracle deserves a tax-deferred-savings account like mine, the fix of pushing the money back overseas, seems worse than the illness.
Yes but this calm, rational, mature, objective point of view doesn't provide the visceral "satisfaction" of punishing people who are easily demonized and easy (often with reason) to hate. So politically, it doesn't sell very well. It doesn't appeal at a base level to the masses who vote emotionally instead of taking the time to recognize certain cause-and-effect relationships.
Politics should be about how to best manage a nation, not what it's become now, which is how to ineffectively resolve one's discontentment with life by trusting liars who don't give a damn about you.
It is a miracle that curiosity survives formal education. - Einstein
In a senario like that the wealthy would be safe, because they could afford a private police force. They middle class neighborhoods would be safe, because they as a whole (neighborhoods setup with stuff like HOAs) could afford a private police force. Poor neighborhoods would be more than likely ran by some sort of gang (a lot are even now).
"Ubuntu" -- an African word, meaning "Slackware is too hard for me". - stolen from Dan C alt.os.linux.slackware
The fair tax act is merely a way to ensure the rich don't have to pay taxes.
Forget the poor, someone making $30k a year with a family of four should not be paying the same rate as a billionaire. Hell, under the fair tax act he would pay a higher percentage income as tax.
Rich folks consume a far lower share of their income every year. If you make $30k or hell $100k a year and have a family of four you are consuming all or near all of that. Thus paying tax on all of it, as compared to a rich person who may only spend a very small percentage of his income.
Rich people consume much less than poor people. They wouldn't be rich if they spent their money. Most money is invested to make more money.
1) Policies that allow children to starve in the streets of one of the wealthiest nations of the world are uncompassionate and unconscionable.
2) Policies that have a net effect of subsidizing the production of babies within the poor class are unscalable and unmaintainable in the long run.
Both of these facts are true, and the most natural responses to them directly contradict one another. You cannot address the pain recognized by one fact without causing the pain of the other.
People tend to harp on one or the other, and each camp has a perfectly justifiable criticism of the other camp. Proponents of both camps will feel completely justified by sound logic, and they are both right.
Any possible middle ground will involve some kind of egregious injustice. There is no way to resolve this situation without leaving someone very justifiably pissed off. You can let the poor starve (watch them turn to crime and feel justified by it), you can give them all the free money they need (watch the earners scream about having what they have earned taken from them to feed parasites, justifiably, and watch the population among the poor explode to unmaintainable levels), you can impose limitations on reproductive rights (watch EVERYONE scream about this and enforcement will be a nightmare), you can claim the babies as wards of the state (hah...yeah that will fly). Maybe you have some other ideas? Post them, so the fact that they will not work can be exposed.